Cycle to Work Scheme

The Cycle to Work scheme is a Government tax incentive announced in the November 2008 budget and has been in operation since 1 January 2009. Employers can buy a bike up to €1,000 for employees to cycle to work and recover the cost from the employee’s pre-tax salary over up to 12 months.

The benefit is not subject to benefit-in-kind taxation and employees can save up to 52% of the cost of the bike, while employers save 10.75% in employer’s PRSI.

Conclusions and Recommendations

Introduction

It can be clearly seen from this report that The Government’s Cycle to Work scheme has been a massive success in achieving its main objective of encouraging individuals to get out of cars and onto bicycles using active travel for their commute.
People today in greater numbers than ever before are using the scheme to reintroduce themselves to the joy and benefits of cycling. At the same time the Irish Government and the individuals involved can reap the multiple benefits this brings.

Active travel and health

We have referenced above the clear health benefits to individuals who use cycling as a mode of active travel. It has also been shown that as individuals increase in health and wellbeing, there is a corresponding inverse reduction in the cost the tax-payer and Government will have to pay in the future, in terms of support from the HSE for a number of diseases or ailments associated with a lack of physical exercise.

Wider benefits

The benefits of cycling, however, are not limited to health, for both individuals and the Government. This report has demonstrated that there are more far reaching implications when an increase of cycling activity takes place within a population.

As levels of active travel increase, rates of pedestrian, cyclist and overall road traffic injuries have been observed to decline, suggesting a ‘safety in numbers’ effect (CTC 2010).

Improvements in quality of life in local communities, as well as a reduction in anti-social behaviour, have also been documented and attributed to an increased presence of people cycling within a location. This is clearly backed up by the increase in the number of Garda patrolling on bicycles.

Local economies

Another positive that has emerged from the introduction of the Government’s Cycle to Work scheme has been the welcome boost to local economies from the massive increase in participants in locally run cycling tours/events and sportifs.

The increase in these numbers has not only increased revenue into local communities, it has also provided a lifeline to charities in a time when fundraising has become more challenging. Charities now, more than ever, are relying on cycling events to raise much needed funds for support.

Costs and Benefits

In this challenging time, it is a fantastic achievement by the Government to have the foresight to introduce and to drive a scheme that not only has massive health and community benefits, but also has had a net benefit to the exchequer.

The scheme supports and stimulates Ireland’s Cycling Economy which is worth approximately €260 m per annum. While due to the success of the scheme, the revenue sacrifice has been greater than expected at €34.2 million, there has been a return to the exchequer of over €38 m, leaving a surplus of €38 m since the introduction of the Cycle to Work scheme in 2009. This return is as a result of:

  • the VAT revenue that has been generated through the increase in sale of bikes through the scheme
  • the knock on effect of bikes bought for family members outside of the scheme
  • the servicing of these bikes every year
  • the repeat sales on accessories and apparel after the initial tax break
  • the 767 jobs which have all been saved or generated through the provision of this scheme

(Ref. Figure 2)

Recommendations

Introduction

It is widely recognised that the scheme has been a great success. Following research and surveys by the Irish Bicycle Business Association, a short number of recommendations have been made to improve the scheme and ensure its continued success.

Crime Prevention

We have seen over history that during a recession petty crime can see an increase and the bicycle may be seen as an easy target. The Irish Bicycle Business Association (IBBA) believes that an allowance needs to be given to individuals who have been the unfortunate victim of bike theft.

Once the theft has been reported to the GardaÍ the employee should be able to avail of the scheme again once within the initial five year period.

Insurance

A further recommendation which would address theft, is to allow cycle insurance to be purchased along with the bicycle, similar to safety accessories at present.

Cycle to School

The Cycle to Work scheme is reversing the fall in the numbers commuting to work. In the report we have also highlighted a fall in the numbers of children cycling to school and the importance of promoting active travel from a young age.

Promotion of cycling to school would complement the benefits of the Cycle to Work scheme. We recommend that the rules on the inclusion of child seats and trailers as accessories in the Cycle to Work scheme are reviewed. Many parents combine the school run with their commute and the promotion of the current generation of accessories for bringing children should be actively promoted.

Every Three Years Rather than Five Years

The Cycle to Work scheme has been a massive success, not only in increasing the numbers getting involved in active travel and using cycling as a form of transport to and from work, but also with wider benefits for health, environment, family, community and local tourism.

At present, employees can only get a bike once every five years under the scheme. The Irish Bicycle Business Association recommends reducing this to three years. Employees who are cycling to work every day are keen to have a bike that is safe, well maintained and in good condition. Cycling must be seen as an attractive option which will compete with driving, where it is not unusual to replace a car every year or two.

Healthy Transport

European countries and cities that have successfully promoted active travel have done so by investing at a level commensurate with the priority they attach to clean and healthy transport. Examples from other countries have been described in this report.

The Irish Bicycle Business Association supports the ambitious targets in the National Cycle Policy Framework and Smarter Travel and recommends that funding for cycling be increased to the per capita levels of our European neighbours.